India household debt hits 45.5% of GDP as borrower quality improves: RBI

Rising leverage is offset by stronger credit profiles, suggesting the central bank sees manageable risk despite the higher debt-to-income ratio.

By Handelsavisen Newsroom · Automated 2026-06-30 16:43 UTC · 1 min read

India's household debt load has climbed to 45.5% of GDP by the end of September 2025, up from 41.3% a year earlier, according to the Reserve Bank of India's latest Financial Stability Report.

The central bank noted that the increase in leverage is accompanied by an improvement in borrower profiles, signaling that credit quality remains robust despite the higher aggregate debt levels.

The rise in household borrowing reflects continued access to credit and consumer demand, but the improved quality of borrowers suggests that default risks are not escalating in tandem with the debt volume.

This dynamic is critical for financial stability, as it indicates that the banking sector's exposure to household loans is being managed effectively.

The RBI's assessment comes as global markets monitor emerging market debt trends closely.

While the absolute level of household debt is rising, the focus on borrower quality provides a reassuring counterbalance, potentially mitigating concerns about a credit crunch or systemic risk in the Indian banking sector.